aml: all my love

You know that moment when you sign up for a new bank account only to find out later that your application got rejected?

One of the biggest problems in the fintech space is fraud. The anti-money-laundering (AML), for short, is a series of regulations and laws targeted to prevent fraud from happening in the first place.

Bad actors use money laundering to make illicit funds appear to have a legitimate source.

This problem of financial fraud is so bad that the total addressable market for fraud detection and prevention is growing at a nearly 17% rate annually.

So AML regulations require financial institutions to have advanced customer due diligence plans to assess money laundering risks and flag suspicious transactions.

Let’s bring in our favourite homebody and thinking expert, ‘The Thinker’, to explain a facet of AML a little deeper:

“ Know Your C ustomer (KYC): This is the act of verifying customers and making sure people are who they say they are.

The process also requires running customer information against criminal databases, economic sanctions, and ‘politically exposed’ individuals.

The process of evaluating and verifying customers is called customer due diligence.

→ It is evaluating whether potential customer information is accurate and legit.

Evaluating the risk of money laundering with each customer and identifying customers that are put on AML lists”

Soooo, you must be wondering why the heck does my money take so long to transfer?

A major rule in AML regulations is to hold the payment for a minimum of five trading days before it can be transferred elsewhere. [at least in the United States of America]

Originally published at https://aatish.substack.com.